Tuesday, 10 May 2011

The staggering number of dodgy PPI sales

Just to be clear about the number of Payment Protection Insurance policyholders who may be in line for compensation, this is what the Financial Services Authority is saying...

16.1m policies sold since 2005, worth £17bn
The significance of 2005 is that the FSA took over regulation of the sector at this point. It issued tighter definitions of its selling rules in 2010: the court case was about applying these back to 2005.

1.5m policyholders have already complained about misselling
Some of these have been held up by the banks during the court case, so haven't yet been resolved. Not all will be paid compensation.

2m non-complainants will be paid compensation
These will be the the result of the banks looking back through their records and contacting customers who haven't complained but were affected by systemic failures in sales. The obvious evidence of this is when lots of others in a group of customers have already complained about misselling.

750,000 future complaints
These are the number of people the FSA believes will be paid compensation after putting in complaints over the next few years.

Total: 4.25m, more than one in four!

These figures don't include pre-2005 cases, where different rules apply but banks may pay out compensation. Lloyds, for instance, says it might go back another 10 years.

Also, the number of future complaints is an uncertain figure. The banks don't have to contact all their customers to tell them they can make a claim.

But common sense suggests it may grow significantly, now that more people are aware of the issue.